Making money....not!

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Aug 24, 2005 1:44 pm

The bottom line is....it's frk'n hard to make a buck. An advisor brings in one million dollars in new assets, and annuitizes the whole thing for 1%. That's 10k per year, he keeps 4,000 after payout, divided by 12 months, that is $333 per month before taxes. So $200 per month after taxes. Knowing how difficult it is to bring in a million in new business, how do you keep motivated????

Aug 24, 2005 3:23 pm

This may sound simplistic, but try not to look at the income generated from what you bring in today or tomorrow as the only fruits of your labor, particularly when you're annuitizing your business.  Instead, recognize the long-term value, and view each segment of new assets under management as another positive step toward achieving your ultimate goals.   That million $ you brought in is not just paying you today, it (and it's appreciated value) will be paying you for as long as you continue to earn the client's business. 


So, when you're at $25mm of assets you're net payout @ 40% is $100k/yr, $50mm is $200k/yr, $100mm is $400k/yr.  (And, should you get to the point where you might want to go independent, your net payout after expenses should be no less than at least 60%, increasing each of those #s by 50% to $150k, $300k, & $600k, respectively.)


Also, as you're building your business remember the "psychic value" of this profession.  You are helping your clients to achieve their goals.  You're helping to solve their financial problems.  You're making a positive impact upon their lives.  While the value of that doesn't directly put additional money in the bank, it gives you rewards that for many may be equal to or greater than the money earned.  That'll sound altruistic to some, but those reps who experience that value truly enjoy their work, and they tend to be the most successful in our business.


So, (to use a trite analogy) think of those segments of new assets coming in the door as yardage gained on a football field.  The small increments of yards gained by themselves don't appear to be so meaningful, but when you reach the end zone, life is grand!

Aug 24, 2005 3:55 pm

Thanks for the perspective, you are absolutely correct, and I am a very optomistic guy.......really. For my last 3 1/2 years in the business, I have always done right for my client, and I annuitize every cent that I bring in........but, my patience is wearing thin, I have made 30,000 - 45,000 -50,000 for the last three years - I can't take it anymore. The thought of helping people (which does give me the sense of worth you speak of) is not enough of a motivator for me. I feel like I have been paying dues forever.

Aug 24, 2005 4:03 pm

Do you have an insurance license?

Aug 24, 2005 4:17 pm

First of all, if you are straight commission or on a draw trying to hit a grid...don't annuitize EVERYTHING.  You have to eat, and if your waiting for that day when you can turn the lights on on Jan 1, and you've already made $300,000, well, you're gonna annuitize yourself right out of the business.


I want a fee based book as much as anybody, but I (as do most) have expectations, whether from management, our families, or ourselves.  So you can't annuitize everything, it just isn't feasible unless you are on a two year salary like at the big wirehouses like ML or MS.


Also, why don't you think about incorporating some insurance business into your practice.  That can help you even out those months when you aren't getting much in up front payout.


Hope that helps a little.

Aug 24, 2005 5:03 pm

Duke, that was an excellent post.  Thanks for sharing that.

Aug 24, 2005 5:21 pm

Money,


How much in AUM do you have so far?  Did you hit the goal of $15MM before two years?

Aug 24, 2005 5:25 pm
moneyadvisor:

Thanks for the perspective, you are absolutely correct, and I am a very optomistic guy.......really. For my last 3 1/2 years in the business, I have always done right for my client, and I annuitize every cent that I bring in........but, my patience is wearing thin, I have made 30,000 - 45,000 -50,000 for the last three years - I can't take it anymore. The thought of helping people (which does give me the sense of worth you speak of) is not enough of a motivator for me. I feel like I have been paying dues forever.


Given your #s, if you enjoy this business you may need to give a hard look at how you're building and doing your business.  If the #s given are your payout, at 40% with $50k made, that equates to only about $125k gross production.  After three years you should be well above that.


The other posters hit on one such thing, and that's doing insurance business.  There's no reason why you shouldn't be looking at the estate plans of each of your viable clients and taking over their insurance business (don't forget disability and LTC). 


But, more importantly, I'd look at the bigger picture of how you're building your business.  If you're doing the same thing you've always done, then $125k gross or so after 3.5 years is an indication that it's probably not working.  Like the old saying goes, doing the same thing over & over again expecting different consequences is a definition of insanity!

Aug 24, 2005 5:27 pm

Yeah man think outside the box. If you are a broker also expand your services.


Insurance, mortgages and annuities are some money makers.


Maybe I am not as experienced as some in this field, but hope my input helps.

Aug 24, 2005 7:43 pm
moneyadvisor:

Thanks for the perspective, you are absolutely
correct, and I am a very optomistic guy.......really. For my last 3 1/2
years in the business, I have always done right for my client, and I
annuitize every cent that I bring in........but, my patience is wearing
thin, I have made 30,000 - 45,000 -50,000 for the last three years -
I can't take it anymore. The thought of helping people (which does give
me the sense of worth you speak of) is not enough of a motivator for
me. I feel like I have been paying dues forever.

Aug 24, 2005 8:10 pm

...(cough)...(cought) - There are only two ways to face the future -
with apprehension or with anticipation. Your designs are flawed.
Period. Stop working outside of the box. You can't possibly have the
referrals from A+ clients to make it to the next level. Forget COI's.
Total fishing expedition - just stay home and down the Wild Turkey -
you don't have the scratch for the fishing tags. If I were in your
shoes I'd be hopping mad at myself. "Optimistic guy" you need to get
off the anti-feez kool-aid and start a bread and water regimin that
rewards results and repetitive activities that will build the kind of
muscle to do the heavy lifting you seem to be optimistically expecting
to materialize. Start an activity log with some basic goals in writing
and I'll check back with you next week. You should start to see some
positive results in about 90 days. 

Aug 24, 2005 8:59 pm
moneyadvisor:

Thanks for the perspective, you are absolutely
correct, and I am a very optomistic guy.......really. For my last 3 1/2
years in the business, I have always done right for my client, and I
annuitize every cent that I bring in........but, my patience is wearing
thin, I have made 30,000 - 45,000 -50,000 for the last three years - I
can't take it anymore. The thought of helping people (which does give
me the sense of worth you speak of) is not enough of a motivator for
me. I feel like I have been paying dues forever.





You almost doubled your income in 3 years.  Keep going, and it
will be 50,000- 75,000 -95,000, then it will be 110,000- 150,000-
180,000.  The market values increase the annuitized value, keep
adding clients, streamline your process.  Before you know it you
will be doing a million and change and still not satisfied...which is
the trait that drives all of us.

Aug 24, 2005 10:26 pm

I have annuitized whenever I could since I began in this business in January this year.


I inherited a pretty small book of 1.5M and I just passed the 10M threshold today when a 250k IRA rollover hit.    Half of my current book is in an annuitized mutual fund wrap program that pays a 1.5% trail beginning in month 13.    I am grateful my firm does pay 3% upfront on these assets to my grid and a prorated chargeback during the first 9 months (only one client has pulled out so far).


When I began this journey my goal was to have 100 accounts and 10M annuitized by end of 2006.      As this juncture I have 70 accounts and 5M so I am ahead of my goals.


If you extrapolate the AUM assuming a very modest 6% annual total return the numbers become very powerful relatively quickly.


I do have an insurance license but only have closed two fixed annuities (unsolicited btw) and zero VA's as I truly believe they are suitable for a very very very small niche of clients.    That being said, the LTC presentations to my existing clients is a great idea as our relationships deepen.


Hope everyone is having a good summer.

Aug 25, 2005 9:04 am

Scrim67,


Great year so far.  Being new to the bank also (since July), I'm glad your doing well.  I brought in 1.3 million this month, but ZERO annuitized.  I really need to start doing it.  I just feel like at the bank, why?  If I was getting 3% upfront, it would be a different story. 


Great job.

Aug 25, 2005 9:06 am

I'm just shy of the 15 mil to graduate in 2 months. I am finishing a training program at a major wire. So, There really is no incentive to do higher ticket business. Accounts don't come in super regular, and I don't want to get into the roller coaster ride of one great month, next sucky month.   Bye the way...thank you all for your input, it really is helping. I do have my insurance license, I do a good share of annuity business (level load).


Aug 25, 2005 9:48 am

wow some great infomation to hear you all talk about different things. Thanks

Aug 25, 2005 11:26 am

You know, you can't have it both ways. My firm has this focus on annuitized business, "It's all we should be doing to build and protect your business, and health of your career" yet, People judge you on Gross Production. If I were to tell you that I did 80,000 Gross last year (in yr.3) some D'bag broker will say I am a slacker......However, all but two trades were done at 1%!!!!! No kidding, if I were grabbing 5% on the business, Gross would be up. I have guys in my firm 5-6 years who do 200k gross, but they have sacrificed to build regular income. You can't judge these guys on Gross. What keeps us focused on annuitizing - half a dozen guys in the office do 100-150k A MONTH in annuitized business. it sucks now, but is'nt it the way to go.


I know what your all going to say......Why am I bitchen, if I believe I'm doing the right thing....I JUST AM, and my colleagues don't want to hear it!

Aug 25, 2005 12:22 pm
moneyadvisor:

You know, you can't have it both ways. My firm
has this focus on annuitized business, "It's all we should be doing to
build and protect your business, and health of your career" yet, People
judge you on Gross Production. If I were to tell you that I did 80,000
Gross last year (in yr.3) some D'bag broker will say I am a
slacker......However, all but two trades were done at 1%!!!!! No
kidding, if I were grabbing 5% on the business, Gross would be up. I
have guys in my firm 5-6 years who do 200k gross, but they have
sacrificed to build regular income. You can't judge these guys on Gross.
What keeps us focused on annuitizing - half a dozen guys in the office
do 100-150k A MONTH in annuitized business. it sucks now, but
is'nt it the way to go.


I know what your all going to say......Why am I bitchen, if I
believe I'm doing the right thing....I JUST AM, and my colleagues don't
want to hear it!





Let me see if I understand your logics. The 200k "Guy" has sacrificed
his future by buying a bigger home, nicer car, fatter vacations, more
dollars to reinvest in his own business development, and of course the
goal to begin a restructuring plan for feez at year 10-12. I wonder
what strategy the dirty half dozen 100-150k a month guys were using in
their first 36 months. I ask again: Apprehension or Anticipation?

Aug 25, 2005 12:32 pm

Snap - What the hell are you saying?

Aug 25, 2005 12:42 pm

The "200" guy is year 6 - making 80K (No....big house, car or vaca, because instead of taking large payouts to have those, he built his future - Are we on the same page here?) but he has annuitized his book, the bene's of which are obvious. The 1/2 dozen, are just guys whove been around for 15 + years, and have monster books. Why all the aggression, and highlighting my statements??? A lot get's lost in interpretation I guess on these boards.